How To Trade Dogecoin in 2023
Over the past couple of years Dogecoin has fast become a staple of the cryptocurrency space. With help from famous backers like Elon Musk DOGE has skyrocketed to levels many would have deemed completely impossible not so long ago - yet here we are.
This popular meme coin is now offered by a whole host of exchanges and brokers. With such a vast array of ways to trade it we have created this simple guide that tells you everything you could need to know about trading Dogecoin. We cover what it is, where and how you can trade it and whether or not you will need a digital wallet.
What Is Dogecoin
Dogecoin was originally founded in 2013 by software engineers Billy Marcus and Jackson Palmer. The project, created by two engineers that were complete new-comers to the space, actually began as a joke; Dogecoin was a reflection and homage of a popular meme of a Shiba Inu dog that had huge cultural traction online. The idea of Dogecoin was to simply mock the sea of Alt coins that sought to rival Bitcoin; it wasn’t supposed to be a valid alternative at the time but merely a shining light on what they saw as a farcical situation.
The purpose of DOGE was simply to bring attention to the act that so many Alt coins brought false promises and overused concepts. If we look at the more technical aspects of Dogecoin and explore the actual use cases it has then again it is somewhat limited; really the only use case it has is as a medium of financial exchange. It allows users, much in the same way as Bitcoin, to send and receive DOGE to anyone that wants to.
However, due to its increased popularity soon there grew alternative use cases that were more commonly associated with Bitcoin and other major Alt coins. For example, as a way to convert energy into currency through mining and also simply as a store of value.
How It Works
Dogecoin uses a Proof-of-Work consensus mechanism to operate, the same as Bitcoin. This means that miners can contribute to the physical infrastructure of the system by solving complex mathematical problems in exchange for rewards in the native currency; in this case DOGE. Originally, miners received a random reward for their services but this quickly became a problem in the community as some found ways to manipulate the system. This was eventually changed to a more conventional system that has set rewards.
Unlike Bitcoin, Dogecoin doesn't have a capped supply; instead it has a falling annual inflation rate of around 4%. Dogecoin also has faster and cheaper transactions than Bitcoin, mainly because block times are only one minute on the Dogecoin network whereas the Bitcoin network is around 14 minutes.
Where Can I Trade Dogecoin?
If you want to trade Dogecoin then you will need to choose a trusted interface to do so. There are a wide range of different types of platforms at your disposal and then a vast array of options within each category. Choosing the right interface for you is an important step in trading Dogecoin because it can affect the returns you make and the experience you have.
Here are the main two options available to you, what they are and some extra suggestions for those looking for something a bit different.
Brokerages are available on desktop, web and mobile devices and provide a trading service, a value storing service and offer help and support to its users. Brokerages are perhaps understood as more trustworthy, especially big institutions like eToro, mainly due to the fact they have been around for many years and are regulated by financial institutions.
Traditionally, they were in the business of financial products like CFDs, stocks and bonds, but nowadays we are seeing the introduction of digital assets like cryptocurrencies. Some brokerages now also offer alternative financial products like CFDs for cryptocurrencies.
Here’s our step by step guide for trading Dogecoin with a broker:
Step 1: Create an Account
Step 2: Verify Your Account
Step 3: Deposit Funds
Step 4: Buy
An exchange is a mediated interface for users to make trades between themselves via an order book or ledger. On exchanges you are able to quickly and easily trade fiat currency (such as GBP and USD) for DOGE, or to trade different cryptocurrencies for each other. Usually, exchanges do not charge commission fees and have highly competitive rates for cryptocurrencies.
Here’s our step by step guide for trading Dogecoin with an exchange:
Step 1: Go on the official exchange website and sign up for an account. You will need to enter an email address and password.
Step 2: After entering your details, you need to provide ID for the KYC regulation process. This includes an official ID, proof of address, and a picture of yourself.
Step 3: Once your account has been accepted, you can deposit funds using any of the available deposit methods.
Step 4: Once your funds have been deposited you need to find DOGE paired with the currency you are holding.
Step 5: Choose how much you would like to buy and make the purchase. Then find your DOGE in your connected wallet.
There are a few other ways you can trade Dogecoin but could be slightly more complicated than the two mentioned above.
Here are some of the other top ways you can trade Dogecoin:
Decentralized Exchange (DEX): These operate in the same way as a traditional exchange, but are unregulated and are not owned/operated by a singular entity.
P2P: Person to person exchanges offer great rates as they have no middle man; it's best to think of this as swapping rather than trading.
In Person: Some places allow for person2person trading, and of course you could do this privately with family or friends.
Do I Need A Wallet To Trade Dogecoin?
No, you don’t need a wallet but it is recommended to use one when possible. You won’t be able to use one when trading Dogecoin with a broker as they are not interoperable but you can with an exchange. Usually the exchange will provide a native wallet for you but it is strongly recommended you transfer your coins from your exchange account to a personal wallet if you’re not intending on actively trading them.
Large amounts of coins are more secure when held in an external wallet because it is much more difficult to hack into and also much less likely to be hacked than a popular exchange with high liquidity.
Dogecoin is currently one of the most popular cryptocurrencies on today’s market. There are a host of ways you can trade this asset and which one is best suited for you depends on what you prioritize when trading.
If you want the lowest fees possible and advanced trading tools then exchanges are the best way to trade Dogecoin. Alternatively, if you want an easy-to-use interface and the option to trade in CFDs then a broker is more suited to you.
Whichever method you choose you must always be careful when trading Dogecoin. It is a very volatile asset which means it’s subject to extreme changes in value - both up and down. When a meme coin like DOGE is so connected to cultural context you must always be aware you could lose whatever you may invest.